Ablynx and ImmuPharma dealing with big pharma rejection


Business development executives at Ablynx and ImmuPharma may not get much of a Christmas break. Both European biotechs are seeking new homes for their lead pipeline candidates having been handed back the rights from big pharma partners in Pfizer and Teva, respectively.

Ablynx was reeling today from news that Pfizer has called time on two partnered anti-TNF-alpha antibodies in phase II and I studies – shares in the Belgian biotech dropped 18% to a record low of €2.95 since going public four years ago. With an estimated enterprise value of just €45m ($64m) and cash reserves exceeding €85m ($120m), Ablynx may find new licensing talks quickly switch to outright acquisition. Meanwhile Teva’s decision last week to allow ImmuPharma to regain full rights to phase II lupus candidate Lupuzor - previously licensed to Cephalon which the Israeli company has just acquired - was less surprising and indeed shares in the UK biotech surged 25% to 93.5p yesterday on FDA agreement for a phase III trial and fast track status.

Double-edged sword

When a small biotech regains rights to its own product or technology from a big pharma partner, the potential positives of gaining control and the opportunity to strike a more lucrative deal are more often outweighed by negative sentiment implied by the decision to scrap the partnership.

The new positions that Ablynx and ImmuPharma find themselves in provide classic examples of how different the outcomes can be. The slight nuances in difference between the two situations help to explain the divergent result.

Fresh start

ImmuPharma has emerged relatively unscathed from Teva’s decision to hand back the rights to Lupuzor, a promising candidate for lupus which recorded decent phase IIb data two years ago (ImmuPharma share price fall looks unfair, November 20, 2009).

Cephalon originally licensed an option to Lupuzor in 2008, taken up in 2009 after the positive phase IIb data, and was responsible for all further development of the drug - a second phase IIb study with a new formulation of Lupuzor is ongoing.

However, Teva’s $6.8bn purchase of Cephalon, announced in May this year and completed earlier this month, changed the dynamics of the deal, allowing ImmuPharma to request the rights back.

The biotech company highlighted the fact that Teva already has a potentially competing lupus candidate in Active Biotech’s laquinimod, undergoing phase II studies in this setting, as a key reason to activate the presumed change-of-control clause in the original contract with Cephalon.

Benefit of the doubt

The loss of Teva, a major global player with some experience of developing drugs for lupus in laquinimod and edratide (TV-4710), which reached phase II before being scrapped, could have hurt sentiment towards Lupuzor in particular and ImmuPharma in general. Yet it seems investors gave the company the benefit of the doubt, its shares largely unaffected on the day the news broke.

Shareholders were subsequently rewarded yesterday with news the FDA has agreed to a phase III trial under a special protocol assessment (SPA) and granted fast track status to the product.

That news will undoubtedly help the partnering discussions the company claims are already underway, and with just £14m in the bank as of the end of June, it is most likely ImmuPharma will want a partner in place before starting any phase III program.

A potential fly in ImmuPharma’s ointment is the worryingly slow uptake of Human Genome Sciences’ Benlysta, previously heralded as a revolutionary treatment for lupus with mega blockbuster potential. The darkening skies over Benlysta’s outlook is likely to put a damper on the valuation of Lupuzor (HGS suffers the launch blues as Benlysta forecasts slump, September 22, 2011).

Taking stock

Ablynx appears to be receiving a much rougher ride from investors. The Pfizer decision was the last thing the company needed, its shares already in freefall due to wider stock market declines in Europe – the stock has now lost almost two-thirds of its value in the last three months.

Ablynx struck a deal with Wyeth in 2006 to develop anti-TNF candidates using Ablynx’s so-called nanobody technology which produces bispecific antibodies at a fraction of the size of standard antibodies such as Humira and Remicade, leading treatments for rheumatic disorders.

Pfizer’s subsequent acquisition of Wyeth in 2009 raised the prospect that the drug’s new owners would take a dimmer view of the potential in these candidates, although Ablynx remained bullish about Pfizer’s commitment to the cause (EP Vantage Interview – Ablynx seeking liquidity to let the investments flow, November 25, 2009).

Those fears came to fruition today with Pfizer handing back the rights to ATN-103 (ozoralizumab) and PF-05230905. Perhaps investors were surprised by the decision given that the US pharma giant presented highly encouraging phase II data in rheumatoid arthritis for ATN-103 in May this year.

Competitive threat

However, with the rheumatology market set for a shake up in the form of new oral agents – most promising of which is Pfizer’s own tofacitinib – and the increasingly tangible prospect of biosimilar versions of Enbrel reaching the US and European markets within a few years, it seems the business case for essentially a follow-on product to Enbrel is looking weaker than it was a few years ago.

Ablynx has said it is reviewing the clinical data handed over by Pfizer but currently expects to proceed with further development of ATN-103 – a PK/PD study in healthy volunteers to decipher optimum dosing of the product is planned for the first half of 2012, while a possible phase IIb/III trial in rheumatoid arthritis is slated to start in 2013.

Although the company is relatively well funded – a very respectable €50m was raised in March 2010 (Ablynx addresses liquidity constraint, March 9, 2010) – Ablynx admits that pressing ahead with ATN-103 would have to be at the expense of other pipeline candidates.

These other candidates include a phase II program for anti-von Willebrand Factor (vWF) candidates ALX-0081 and ALX-0681, as well as phase I products in anti-IL-6R nanobody ALX-0061, anti-RANKL agent ALX-0141 (similar to Amgen’s Prolia), and anti-CXCR4 candidate ALX-0651.

Beyond these programs are pre-clinical and research stage collaborations with three further big pharma partners in Novartis, Boehringer Ingelheim and Merck Serono. Ablynx’s bargain basement valuation might just tempt one of these partners to consider buying the company outright.

Share This Article